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All-in: Chevron Invests $3 Billion in Alternative Fuels
04/12/2022
With the purchase of Renewable Energy Group Inc. for $3.15 billion, Chevron makes its largest investment in alternative fuels.
In a statement on Feb. 28, the second-largest U.S. oil and gas company said it would pay $61.5 for each share of Renewable Energy, higher than its February 25 closing price by nearly 40%. In premarket trading, renewable energy shares rose more than 37% on the backdrop of this staunch.
This turn in investments highlights the shift in the world’s attitude toward climate change. Since oil companies contribute heavily to global emissions, governments and investors are increasingly urging them to reduce their carbon footprints and join the fight against emissions.
As state and federal subsidies to decarbonize fuels increase, U.S. refineries have likewise increased the production of renewable diesel.
In line with this, by 2050, Chevron aims to cut gas emissions to zero and in September committed to investing $10 billion to reduce its carbon emissions through 2028, with about $3 billion dedicated to renewable fuels.
In the biofuel industry, agricultural waste and traditional food crops are grown specifically for use as fuel. The feedstock for biodiesel and renewable diesel is similar, however renewable diesel goes through a separate refining process so that its chemical composition is the same as ultra-low-sulfur diesel.
At the moment, various markets are being explored by Chevron as potential sources for blending biodiesel into renewable diesel.
The executive vice president of downstream products and chemicals, Mark Nelson, believes that biodiesel is viewed by business people as a blendstock to achieve optimal margins since it is less expensive than renewable diesel.
As a result, the EIA estimates that renewable diesel capacity in the U.S. may grow more than fivefold by 2024, from a current capacity of 1 billion gallons to over 5 billion gallons.
It is intended that this deal will accelerate Chevron's goal of increasing the production of renewable fuels to 100,000 barrels/day by 2030, and it will provide additional feedstock supplies and pre-treatment facilities.
According to Reuters, Chevron is not likely to break out its renewables business' financials separately immediately. But the possibility of such an outcome will grow with each year.
After the start-up of Renewable Energy Group's Geismar expansion plant in Louisiana, the transaction is expected to add earnings to Chevron in its first year and cash flow to its free cash flow. While the deal itself is expected to close in the second half of the year.
Guggenheim Securities advised Renewable Energy on the deal, while Goldman Sachs provided financial advice to Chevron.
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$1B Deal: Williams Buys Out Houston-based Midstream in Haynesville Basin
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By purchasing the gathering and processing assets of Trace Midstream, Williams' existing footprint gains expanded capacity in one of the nation's largest growth basins, bringing its Haynesville gathering capacity to over 4 Bcf/d — increasing more than 200% from 1.8 Bcf/d. The deal also includes a long-term commitment from Trace and Quantum to support Williams' Louisiana Energy Gateway project (LEG), which is aimed to deliver responsibly sourced Haynesville’s naturalgas to markets along the Texas and Louisiana GulfCoast
Pine Wave Energy and Silver Hill Reached an Agreement Over Haynesville Assets — Deal is Sealed
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Looks like Pine pulled the plug on its properties in Caddo Parish, Louisiana, and Harrison and Panola counties, Texas. Which includes a total of 12,500 acres and ownership interests in 10 operated wells with a production capacity of 100 million cubic feet per day along with 18 miles of naturalgas gathering pipelines. Did Pine just give up on Haynesville?
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/184Blog_Rangeland Energy Divests Canadian Pipeline to Kingston Midstream.png)
Rangeland Energy has agreed to sell Rangeland Midstream Canada to Kingston Midstream Alberta and remains committed to future Canadian midstream investments. Texas-based Rangeland Energy, supported by financial partner EnCap Flatrock Midstream, has inked a deal to sell its Canadian subsidiary, Rangeland Midstream Canada Ltd., to Calgary's Kingston Midstream Alberta Ltd. for cash.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/187Blog_ONEOK Completes Acquisition of Magellan Midstream.png)
The merger between ONEOK and Magellan received approval from Magellan shareholders, securing just 55% of the total votes at Magellan’s meeting on Sept. 21. ONEOK Inc. has successfully concluded the acquisition of Magellan Midstream Partners LP on Sept. 25. The deal will bring together their respective assets and expertise, resulting in a powerful entity boasting an extensive network of approximately 25,000 miles of pipelines primarily focused on transporting liquids.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/186Blog_Viper Energy Secures $1 Billion in Permian.png)
Viper Energy's deal, comprised of cash and equity, secures an additional 2,800 net royalty acres in the Midland Basin and 1,800 in the Delaware Basin. Viper Energy Partners LP, a Diamondback Energy Inc. subsidiary, has inked a deal to acquire mineral and royalty interests in the Permian Basin. The deal, valued at around $1 billion, is with Warwick Capital Partners and GRP Energy Capital. Viper was established by Diamondback with the purpose of owning, purchasing, and capitalizing on oil and natural gas assets in North America, specifically targeting mineral and royalty interests.